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Owning Your Own Business

Current Trends
Entrepreneurs Today
Self-Employment
Franchising
Worker-owned cooperatives
Profit Sharing
ESOPS (Employee Stock Ownership Plans)
Wall Street and Stock Ownership

Entrepreneurs Today

From 1987 to 1992, minority-owned businesses in the U.S. increased 60 percent, totaling more than two million in 1992. (Source: U.S. Census Bureau, 1992)

Women-owned firms account for nearly 36 percent of all businesses nationwide and employ more than 18.5 million people, more than all Fortune 500 businesses combined. (Source: Business Wire, "Working Woman magazine and Bank One seek America's blue chip women entrepreneurs," June 16, 1998; National Foundation for Women Business Owners)

Growth in minority women-owned firms in recent years has been in non-traditional sectors. Between 1987 and 1996, the number of minority women-owned firms has grown by 319 percent in construction, 276 in wholesale trade, and 253 percent in transportation, communications, and public utilities. (Source: National Foundation for Women Business Owners, "1996 Facts on Women-Owned Businesses: Trends Among Minority Women-Owned Firms," 1997.)

Fully 54 percent of women owned firms with 10 or more employees offer flextime or job sharing arrangements as an employee benefit, compared to 33 percent men-owned firms. (Source: National Foundation for Women Business Owners, "Retirement Plan Trends in the Small Business Market: A survey of women-owned and men-owned firms," 1997.)

Small businesses, with less than 500 employees, employ 53 percent of the private work force, contribute 47 percent of all sales in the country, and are responsible for 50 percent of the private gross domestic product.(Source: U.S.Department of Labor; U.S. Department of Commerce)

Small businesses produce 55 percent of innovations. Among the important innovations by U.S. small firms in the 20th century are the audio tape recorder, double knit fabric, fiber optic examining equipment, the heart valve, optical scanner, pace maker, personal computer, soft contact lenses and the zipper. (Source: The Futures Group, "Characteristics of Innovations Introduced on the U.S. Market in 1982," a 1984 study; U.S. Small Business Administration-sponsored research)

About 16 million Americans are engaged in some kind of entrepreneurial activity - either run a business full-time or contribute on a part-time basis - representing about 13 percent of non-agricultural workers in the United States. (Source: U.S. Small Business Administration)

Venture capitalists put $11.4 billion into nearly 2,000 young firms in 1997, a 16 percent rise in funding from the year before. (Source: VentureOne Corporation)


Self-Employment

There are about 8.5 million Americans who work as independent contractors. (Source: U.S. Department of Labor, "Contingent and Alternative Employment Arrangements," Feb. 1997.)

About 1 and 11 workers in the United States is self-employed. (Source: Bregger, John, "Measuring self-employment in the U.S.," Monthly Labor Review, Jan/Feb.1996.)


Franchising

Franchising grows around 10 percent each year, with a new franchise business opening in the U.S. every eight minutes each business day.(Source: International Franchise Association, 1998)

Over 600,000 franchise businesses operate in the U.S. today, employing more than eight million Americans. (Source: International Franchise Association)

Franchise start-up costs range from about $5,000 to $500,000. (Source: Behar, Richard, "Why Subway is the biggest problem in franchising," Fortune, March 13, 1998, pp. 126; Gutloff, Karen, "15 Franchises for Under $50,000," Black Enterprise, September 1997.)

In addition to the one-time franchise fee, franchisees are required to pay ongoing royalty costs to the franchisor, typically equal to 2 to 8 percent of gross sales. They're also responsible for about 4 percent of sales for advertising expenses. (Source: Caminiti, Susan, "Entrepreneurs: look who likes franchising now," Fortune, September 23, 1991, pp. 125.)

Hot franchise ideas catering to 1990s busy families emphasize convenience. Franchising growth is concentrated in food delivery taxis, cleaning services, childcare, senior care, tailoring, dry cleaning, and drive thru operations. Newly emerging trendsalso include, home based office supplies, children's fitness and lower cost funeral supplies. (Source: International Franchise Association)


Worker-owned Cooperatives

There are over 360 worker-owned cooperatives nationwide. In 60 percent of them every worker is an owner. On average, there are 43 members per worker-owned cooperative. (Source: Adams, Frank, "The ICA Group Directory of Workers' Enterprises in North America," Industrial Cooperative Association Group, 1991)

One of the first worker-owned cooperatives in the United States was a 1700s cooperative of cobblers in Philadelphia. (Source: from an Interview with Frank Adams, June 29, 1998. )

Worker-owned cooperative businesses in the U.S. are concentrated in trades ranging from ship building, textile manufacturing, printing and publishing to income tax services and health care. (Source: Industrial Cooperative Association Group)


Profit sharing

More than 13 percent of employees in medium to larger private companies nationwide share in profit sharing agreements. In both small and large companies, over 12 million employees are participating. (Source: Department of Labor, "Employee Benefits Survey," 1993; Series ID#: EBUPROFITSHA00ML)


ESOPs (Employee Stock Ownership Plans)

The number of ESOPs has grown from 1,600 in 1975 to over 10,000 in 1997.Each year more than 600 ESOPs are formed. (Source: National Center for Employee Ownership)

Every day in America, about nine million people go to work at 10,000 companies with ESOPs. (Source: National Center for Employee Ownership)

Companies combining employee ownership with participative management grow up to 11 percent per year faster than they expected. (Source: National Center for Employee Ownership)

Productivity grew 52 percent faster in ESOP companies that also used participative management. (Source: U.S. General Accounting Office, GAO/PEMD-88-1 ESOPS and Corporate Performance, 1987)

91 percent of ESOPs were started as an employee benefit. 74 percent were started for tax advantages; 70 percent, to improve productivity. (Source: U.S. General Accounting Office, GAO/PEMD-87-8 Benefits and Costs of ESOP Tax Incentives, 1986)

The majority of ESOP companies, 66 percent, reported improved employee morale, and tax savings, 60 percent, as the biggest advantages to becoming an ESOP. Over a third, 36 percent, reported higher productivity and reduced turnover, 33 percent, as other advantages. Sixteen percent of ESOPs reported diluted stock value and repurchase liability. Still the majority of ESOPs, 57 percent, cite no disadvantages. (Source: U.S. General Accounting Office, GAO/PEMD-87-8 Benefits and Costs of ESOP Tax Incentives, 1986)

Employees of about a third of ESOP companies had more non-managerial involvement in company decision making after their companies formed ESOPs. 15 percent had formal employee involvement and 76 percent had informal involvement. (Source: U.S. General Accounting Office, GAO/PEMD-87-8 Benefits and Costs of ESOP Tax Incentives, 1986)

Big name companies with ESOPs include: Proctor & Gamble, Xerox, McDonnell Douglas, Rockwell International, Delta Airlines, Quaker Oats, Ralston Purina, J.C. Penney, Georgia Pacific, Hallmark Cards, Avis Car Rentals, Merrill Lynch, and Polaroid.


Wall Street and stock ownership

The Dow Jones Industrial Average, the best known market barometer, has more than tripled in the last decade. (Source: Bryant, Adam, "Feeding the New Work Ethic," The New York Times, April 19, 1998.)

Corporate underwriting is at an all time high, with securities companies raising almost $1 trillion for corporate America in the first half of 1998. (Source: Securities Data Company)

261 companies went public from January to June 1998, generating $21 billion. (Source: Securities Data Company, "U.S. IPOs," 1998)

The wealthiest one percent of Americans controls 50 percent of the stocks in this country. The bottom 80 percent owns 3 percent. (Source: Federal Reserve Board, Survey of Consumer Finances, 1995; U.S. General Accounting Office, GAO/PEMD-87-8 Benefits and Costs of ESOP Tax Incentives, 1986)

Employees control about eight percent or $663 billion of the total corporate equity in the country through ESOPs, stock options, and 401(k) retirement savings and profit sharing plans. (Source: National Center for Employee Ownership)

The number of employees receiving broad-based stock options has doubled in the last five years from 2.5 million in 1992 to 5 million in 1997, with 1. 5 million added in the last year and a half. There are about 3,000 broad-based stock option plans in the US represented at about 11 percent of major companies. (Source: National Center for Employee Ownership; Bryant, Adam, "Feeding the New Work Ethic," The New York Times, April 19, 1998.)

For five years, the Employee Ownership Index (EOI), which tracks the performance of 350 stocks in employee owned companies, has outperformed the majority of stock market averages, including the Dow Jones Industrial Average (DJIA) and The Standard & Poors 500 (S&P). The EOI's cumulative stock appreciation since 1992 was 193.2 percent, whereas returns for the DJIA & S&P were 145.51 percent and 140.55 percent. (Source: American Capital Strategies, 1998)

Livelyhood's third one-hour special, "Honey, We Bought the Company," aired on PBS in September 1998. For information on how to order the show, call 510-268-WORK.

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